Why Do Economists Say There is an Annuity Puzzle?

By Wade Pfau, Ph.D., CFA, RICP®

Economists are known for describing the annuity puzzle. The puzzle is: why do people not purchase income annuities (exchange a lump sum payment for a guaranteed lifetime income stream) to the extent predicted by economic theory? A number of explanations have been…

The Shocking International Experience of the 4% Rule

By Wade Pfau, Ph.D., CFA, RICP®

The Shocking International Experience of the 4% Rule. An argument made in support of the 4% rule is that despite what I argued before, post-1926 U.S…

Are market valuations the most important factor for retirement income strategies?

By Wade Pfau, Ph.D., CFA, RICP®

The question remains as to whether historical withdrawal rates provide sufficient insight about what can reasonably be expected to work for more recent retirees.

Spending Amounts vs Spending Value

By Wade Pfau, Ph.D., CFA, RICP®

How much should you plan to spend each year in retirement? That depends in large part on your budget.

Fixed Time Horizons vs. Survival Probabilities for Retirement Planning

By Wade Pfau, Ph.D., CFA, RICP®

The planning horizon for the 4% rule is 30 years, but how long will your retirement really last?

Safety-First Retirements Are Expensive with Low Interest Rates

By Wade Pfau, Ph.D., CFA, RICP®

Building an inflation-protected spending floor in retirement can be incredibly expensive in a low interest rate environment.

Retirement Planning Guidelines: An Alternative to the Trinity Study

By Wade Pfau, Ph.D., CFA, RICP®

Today, I’d like to suggest an alternative table for prospective retirees to use. This table is based on the same data as the Trinity study table, but using Monte Carlo simulations instead of historical simulations.

Are Annuities (SPIAs) Okay When Interest Rates are Low?

By Wade Pfau, Ph.D., CFA, RICP®

Readers of my last blog entry, Annuities and Delayed Social Security, provided many valuable comments, prompting me to now write a follow-up post. Most of the discussion centered on a chart showing the relationship between annuity payout rates and interest rates. That…

Safe Retirement Income with TIPS and a deferred annuity

By Wade Pfau, Ph.D., CFA, RICP®

Coincidentally, a message I’ve been seeing repeatedly from many sources during the past week is the reminder that a strategy of using a bond ladder to provide one’s retirement income is still exposed to longevity risk. That is, using TIPS to provide…

Safe Withdrawal Rates and Life Expectancy, Part 2

By Wade Pfau, Ph.D., CFA, RICP®

Safe Withdrawal Rates and Life Expectancy, Part 2

Guidelines for Withdrawal Rates and Portfolio Safety During Retirement

By Wade Pfau, Ph.D., CFA, RICP®

A lot of retirement withdrawal rate studies are very repetitive and do not really offer anything new. This article offers a very nice graphical way of presenting its results.

“Making Retirement Income Last a Lifetime”

By Wade Pfau, Ph.D., CFA, RICP®

I’m now in the process of re-reading some of the classic studies on retirement planning.  As I am more involved in the research side of it now, doing this allows me to see points that I missed before or otherwise had just…